Breaking News: Contract Talks Between Metro, AnsaldoBreda Break Off. Rail Car Contract Goes to Bid (Updated: 11/1 9:11 A.M.)

Oh, for the  love of…

After all that drama, the ongoing soap opera between AnsaldoBreda and Metro ends with a press release.  There’s a lot more to say about this, but that will have to wait until Monday.  After the jump you can find statements from Mayor Villaraigosa and Metro release can be found after the jump.(update: AnsaldoBreda’s statement can be found at the bottom of the page as well.)


LOS ANGELES  – Mayor Antonio Villaraigosa issued the following
statement today on the expiration of the option for the Los Angeles
Metropolitan Transportation Authority’s purchase of rail cars from

"In these tough economic times, it was important to make every effort
to bring good jobs to LA and simultaneously exercise due diligence to
protect public funds in pursuing this contract.

Unfortunately after months of negotiations, at the last minute
satisfactory financial guarantees were not provided and the deal was
not signed.

We will continue to work to see that rail cars can be built in LA using
local funds to reap the job and environmental benefits that a
manufacturing plant can bring to the region."



     Italian rail car manufacturer
AnsaldoBreda S.p.A. has declined to sign a contract with Metro to exercise an
option to provide 100 additional light rail cars to meet the agency’s
operating needs for new rail lines in Los Angeles County.
As a consequence, Metro will proceed with seeking industry bids on a new rail
car procurement.

     Good faith negotiations between
the two parties have gone on for more than a year. The Board of the L.A. County
Metropolitan Transportation Authority had set a deadline of midnight Oct. 30 to
reach agreement on exercising the rail car options. But within hours of the
deadline last night, AnsaldoBreda S.p.A. required changes to the agreement that
were inconsistent with the Board’s direction, including financial
penalties for late deliveries. Considering AnsaldoBreda S.p.A. has been late in
delivering its base order of 50 cars, Metro officials declined to accept this
last minute change.

     Last week the agency’s Board
of Directors gave AnsaldoBreda S.p.A. additional concessions including a
guaranty financial cap and agreed to accept the company’s offer of two
free rail cars because it couldn’t deliver rail cars within the weight
limits specified in the contract.

      With half a dozen new rail
projects expected to open in the next decade, thanks to the Measure R
transportation sales tax, Metro needs more than 100 rail cars manufactured and
accepted in time to operate those lines. To avoid losing valuable time while negotiations
with AnsaldoBreda S.p.A. were ongoing, the Board directed Metro staff to
simultaneously prepare for soliciting bids for new rail cars. Industry experts
have been advising staff  in drafting the package. If all goes according
to schedule, the transportation agency’s Board next spring will award a
contract for new rail cars. AnsaldoBreda S.p.A. would be eligible to bid on
this new contract along with manufacturers from around the world.



AnsaldoBreda agreed to provide financial guarantees that
included an Irrevocable Letter of Credit, a Performance Bond and a Parent
Company Guarantee totaling a value well above that of the contract. However,
AnsaldoBreda, in accordance with Company policy, required to restate the
provision of the original contract, contemplating a cap on the liquidated
damages. Therefore AnsaldoBreda proposed a solution which specified a cap for
maximum delays and stated that if the threshold of the cap was ever reached,
MTA could terminate the contract for reasons of default and avail itself of the
above mentioned guarantees which would cover the total value of the contract. 
Unfortunately, on this last point, despite multiple efforts to negotiate in
good faith on both sides, no agreement was reached. AnsaldoBreda would like to
thank Mr. Leahy and the staff of MTA for the trust extended to them and for the
dedication demonstrated in trying to reach a positive
conclusion.  Despite this turn of events, Los
Angeles continues to represent a focal point for our strategy in America.

  • Erik G.

    Well, now, that’s an interesting development.

  • S.S. Sam Taylor

    Shocking. But an absolute treat to the taxpayers of Los Angeles.

  • Erik G.

    I always love the local media who constantly confuse LA Metro with the SCRRA (d.b.a. “Metrolink”):

    (In case it gets changed, when I am posting this there is a picture of a Metrolink diesel locomotive, a squared-off F59-something, alongside the story)

    Time for Metrolink to become “Regiolink”?

  • Erik G.

    From a post I wrote on another site back in February (so some of this is now outdated):

    AnsaldoBreda in Denmark:

    The company has recently become known for delaying the delivery of the new IC4 high-speed Diesel multiple units and refusing to acknowledge penalties claimed by the government because of these delays. The trains were supposed to be ready in 2003, but so far Ansaldobreda has only been able to deliver a single set for testing. May 21st 2008 the Danish customer DSB announced that they would cancel the entire 5 bill. DKK (€670mln) contract unless at least 14 sets are delivered and in service by May 2009. However 70% of the contract amount has already been paid to AnsaldoBreda.

    AnsaldoBreda in Holland:

    The Dutch operator NS Hispeed has placed an order for nine V250 ‘Albatros’ high-speed trainsets for operation on the HSL Zuid high-speed line between Brussels and Amsterdam. Belgian national railway operator NMBS ordered another 3. However, Ansaldobreda was also unable to deliver these trains on time, and testing with the only available set (in the Czech Republic) did not begin until 2008.

    AnsaldoBreda in Norway:

    Ansaldobreda is also responsible for providing the new fleet of Classe 72 EMUs for NSB (Norwegian State Railways) local trains in Norway, replacing the aging BM69 units.

    They have also, partnered with Firema, delivered the most recent trams (SL95) to the City of Oslo in the years 1999-2004. Both the NSB trains and the Oslo trams experienced initial technical problems, SUCH AS NOT BEING ABLE TO RUN IN TEMPERATURES BELOW 50 DEGREES FAHRENHEIT* which Ansaldo/Firema received heavy criticism for.

    *(These temperatures apparently can and do occur in Oslo, Norway!)

    Breda in Boston:

    The Type 8 LRV for Boston’s Massachusetts Bay Transportation Authority (MBTA)(manufactured 1999-2008 with interruptions) These LRVs had extensive problems, and Breda’s attempt to gain the contract for an order of MBTA Blue Line cars was refused despite Breda having the low bid.

    Breda in Seattle:

    Breda won a contract for dual-mode (electric trolley and diesel) buses for the Seattle Bus Tunnel over Neoplan. Neoplan had a permanent manufacturing facility at that time in Lamar, Colorado paying professional wages ($20-$30 plus) for assembly, but Breda got the nod by promising to assemble the overseas-manufactured components in Washington State at an agreed-upon wage; it was later found that the assembly workers were in fact being paid just above minimum wage and the buses turned out to be of poor quality.


    Since the above was written, AnsaldoBreda has signed a contract to build an Automated Metro in Saudi Arabia in partnership with Osama Bin Laden’s Family:

    And as part of a colonial reparations action by the Italian Government, AnsaldoBreda delivered the forst of a series of High-Speed Trains to Libya’s Colonel Muammar Qaddafi:
    Page 3 of:

    I’ll leave you to draw your own conclusions.

  • Erik G.
  • Good. I’m very happy with this development. As a person who has had to ride on those questionable cars I’m glad the talks broke off. My gut feeling tells me that those cars aren’t safe. They are also too small. They feel small and at the same time heavy, it’s weird.


  • I guess Charlie Brown got tired of letting Lucy pull the football out from under him.

    The Metro press release mentions that Breda will still get to bid on the new cars. So they may be gone, but not for long.

    Either way once we have cars that are actually operational, can we get Breda to take back and compensate us for the original cramped cars?

  • Erik G.

    This part of the LA Times L.A. Now blog posting, is even more shocking to me:

    The deal’s disintegration has ramifications beyond the future work, said MTA board member Richard Katz, a Villaraigosa appointee. He cited an agreement under which AnsaldoBreda was going to provide two free rail cars, which sell for $3 million each, to make up for building the vehicles heavier than specified…

    In tones that reflected the soured relations between the company and local officials, Katz called AnsaldoBreda “unprofessional and so unbusinesslike,” and said the company’s inability to perform under its existing contract could result in litigation.


    P.S. Damien Goodmon, who was Lucy and who was Charlie Brown in this?

  • Ken Ruben

    Hi Everyone:

    I do remember what happened in 2003 as Erik G. and I were among the 37 individuals aboard including Kurt Streeter of the LA Times along with his photographer. (Kurt now does sports columns).

    We left aboard the FIRST northbound train at 4 a.m. for Pasadena and after the round-trip back to LA for the first time, I was interviewed and photographed but the interview and photographs were never used. Another friend of mine aboard was mentioned the next day in the Sunday LA Times (the first trip was on a Saturday).

    I agree with my friend, Dana Gabbard, about having extra buses available ala the 632. We needed the buses back in 2003 and I am sure we will need them for this opening.

    I hope MTA changes their mind within the next two weeks on this matter.

    Incidentally, I grew up and went to school in the area served by the Eastside Gold Line Extension. I used the “P” car for many years which the “Extension” uses part of the route of.

    It should be an interesting opening.

    —“Ken” Ruben—

  • But after reading all the text, I still do not clearly understand where the gap in negotiations was. Can anybody comment?

  • Interested — I think under all the jargon it was a simple dollars and cents calculation by Breda. They had sweetened the deal with promises of a plant, fiscal guarantees, two free cars, etc. I think one of their bean counters finally added it all up and the company officials looked at what he had found and blinked. To make additional demands at the last minute to me reads that Breda just wanted an excuse to scuttle a deal they no longer wanted.

    I agree with Damien Newton–this is beyond being beyond surreal.

    And of course we continue to have the troubles of light rail procurement at Metro, the dubious legacies of the P-2000 and P-2550 cars, that we need someone to get to the bottom of. We can’t keep repeating mistakes plaguing these multi-million dollar expenditures whose results will operate on our rail lines for 30+ years. As with TAP and the delays in the Eastside Line, where is the leadership at the Metro Board?

  • j stevenson

    The gap in negotiations was that AnsaldoBreda wanted a cap on penalties it paid if it was late again in delivering trains. Which leads me to believe they planned on being late again.

    If AnsaldoBreda cannot deliver trains on time and within the weight limit (6000 lbs overweight, which meant the county had to spend money reinforcing overhead bridges) then they should step aside.

    Canadian company Bombardier, German company Siemens and Japanese company Kawasaki Heavy Industries will all be more than willing to build trains on time within the weight limit.

    Let’s say ciao to AsaldoBreda.

  • Joel

    ^^^ Totally agree ^^^ Who picked out AsaldoBreda for this anyway? Did they even ask any of the more experienced companies for quotes mentioned above?

  • Jack

    The big winner here is Antonovich who fought tooth and nail against Breda. he’s the only one that got this right from the start, and should be applauded for telling everyone that Breda was full of BS. For katz and the mayor to call Breda unprofessional after they pimped Breda to the MTA is so disingenuous it’s sad. Don’t agree with Antonovich often but he was 100% right on this sad deal.

  • Anita

    I live in Swedem town of Gothenburg and now 6 years later then agreed, we have recieved 40 trams from this company, that are totally useless. Last week the town withdraw them from the street because of major rost.problems, brakeproblems and many more issues.

  • Erik Griswold

    Thanks Anita for reminding us in Los Angeles about the bullet LA Metro dodged.  It has been a stellar 2013 for the Clowns from Pistola hasn’t it?  What with the CEO of Finmeccanica being arrested on corruption charges, the Fyra @0165328a236ef396eb4e24214d65b1cf:disqus 

    250 “Fail-ra-sco” and your Göteborg Spårvagnar fleet-grounding.  I am enduring to compile all the information I have collected over the years on AnsaldoBreda into a series of posts on the Copenhagenize blog, and a Part Two will be forthcoming, but here is Part One if you’d like to read about the Fyra case:


Metro Board Preview: LRTP, AnsaldoBreda, Silver Line and Tolls

This week’s Metro Board Meeting, the meeting where much of the transportation related news for the entire month comes to a conclusion, has a lot of interesting items.  Highlighted by the potential passage of the "2009" Long Range Transportation Plan and the potential extension of the AnsaldoBreda light rail car contract.  However, some smaller items, […]